Burlington in mediation talks on telecom

Latest step in Citibank suit

Jan. 23, 2013

Written by

Free Press Staff Writer

Mayor Miro Weinberger confirmed late Wednesday afternoon that Burlington and Citibank will begin two days of court-ordered mediation talks on Burlington Telecom on Thursday.

Citibank sued the city in federal court in the fall of 2011, accusing the city of fraud and breach of contract in an effort to recover at least a portion of the $33.5 million the financial institution advanced to the city in 2007 to complete its citywide broadband network.

In June 2010, having learned that the administration of then-Mayor Bob Kiss had spent $17 million of city money to keep BT afloat — money spent without informing the Board of Finance, the City Council or state regulators, and in violation of both the City Charter and BT’s state license — the council refused to appropriate money for payments on the Burlington Telecom-Citibank lease purchase arrangement, and it was terminated.

The Citibank lawsuit followed that decision.

Weinberger said Thursday’s session with Citibank, which he plans to attend flanked by city attorneys, will be his first meeting with the bank’s officials.

He said a settlement is important in order to put the legal dispute to rest and reassure municipal credit rating agencies that the city is putting its financial house in order.

In a December report on Burlington Telecom prepared by telecommunications consultant Gary Evans, who has advised the city since early 2010, Evans said that “potential investors” for the cash-strapped system “likely will want the details of a settlement” before committing to any arrangement with the city.

Weinberger concurred in that judgment. He was unwilling to discuss possible investors.

Weinberger acknowledged he has briefed the City Council twice in executive session on elements of a possible settlement, but he said revealing those details could make settlement discussions more difficult.

He has said previously he is open to a settlement if the terms are “favorable” to taxpayers. He declined to describe what those terms might be.

He said that because nothing has been budgeted for a settlement, any agreement that involved city expenditures or contractual commitments would require the approval of the City Council and would become public at that time.

City Council President Joan Shannon, D-Ward 5, said she can’t discuss what a settlement might involve. “I am sorry,” she said, “but this is a litigation matter and councilors are not at liberty to speak, or email on this topic. If there is a vote on a settlement agreement, that will be public.”

Weinberger said it is not clear that the talks will result in an agreement but said the work of preparing for the talks may bear fruit “in coming months.”